The latest trending in Supply Chain Planning

Supply Chain ManagementAs the science of supply chain management gets more complex and refined, we rightly expect to gain more control in terms of supply continuity. We like to get as lean as possible in order to take advantage of keeping inventory costs down and this is where it’s important that supply chain planning (SCP) keeps pace with the development of the other components of supply chain management (SCM).

Replacing Sales & Operational Planning

In simple terms supply chain planning is the discipline of forecasting product and/or service. Until recently many companies relied on Sales and Operational Planning (S & OP) to forecast demand and link operational performance to it. But with the global development of supply chain management theory, most supply chain conscious organizations have turned to SCP, a bespoke set of modules within their SMC software.

The Integrated Business Planning (IBP) trend

The latest trending in supply chain planning development is to adopt an Integrated Business Planning (IBP) approach, which is more closely linked to the financial operations of a business, whereby decisions are based on targeted inventory levels.

IBP in action at the cutting edge

Utilizing this IBP approach, leading exponents of the methodology reconcile demand and supply not only internally, but with their trading partners too in the pursuit of sustaining planning demand excellence. Senior management at board level adopts ownership of this philosophy by linking it to the business’s financial performance. The use of state-of-the art dashboards facilitates the use of real time alerts, enabling rapid response decision making. By making use of the latest web advancements, all elements of ERP and IBP orientated S & OP disciplines are integrated via cloud based computing platforms.

Real time planning

With the improvement in feedback time, in terms of data from marketing, campaigns and projects, advanced supply chain planning software is now able for the first time, to build this information into analytical, tactical, and operational modeling on a daily basis, thus updating the forecasting process on a virtually continuous process. Some companies (like Proctor and Gamble for example) have taken this to the nth degree, making demand calculations several times during the course of a single day.

Making better use of new automated forecasting capabilities

Some supply chain planning personnel feel they are inundated with information, and that a disproportionate amount of their time is based on plain, boring “number crunching”. But the new breed of SCP software is now able to relate different Stock Keeping Units (SKUs) with appropriate specific forecast methodologies. This cuts down the amount of time that personnel have to spend on analytics, and allows them to manage the forecasting process rather than simply being inundated with data.

Combining planning and analyzing capabilities

In the past, planning and analytics have been divorced, these functions being carried out often in different departments, and by people who are only engaged in their own particular limited area of the overall planning process. This often promotes dysfunction, with decisions being made in isolation, not always being appropriate for specific SKUs and products.

Many supply chain planning software designers and suppliers have now factored analytics into the software mix, so that it is automatically embedded into formula, and becomes factored into the automatic forecasting, operational  process. This not only prevents having to pass the data on to someone in a different department who has different goals and priorities, it also ensures that the latest data is being used for the analysis. With the increasing speed of response times, and the smaller the interval between the planning/forecasting tasking, this is becoming not only beneficial, but essential, in order to maximize accuracy.

Advanced analytics promote improves supply chain planning

Another area where automated processing can be of great help is with so-called “big data.” With the development of data storage courtesy of computing in the cloud, more and more business are making more use of the massive amounts of data  (particularly in the FCMG industry) that can be used to forecast demand and anticipate trends. This type of in-depth data is facilitating analysis to take place in areas that were previously never even thought of in some instances.

The bottom line is that the existence of these new automated tools can now be used to significantly improve the performance of supply chains, taking them to the next level in terms of responsive forecasting and planning.

Does the increase in frequency of planning/forecasting present certain dangers and if so what are they? Have your say at the feedback section below.

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